Promotional pricing is a short-term pricing strategy where a product or service is offered at a reduced price, or with added value, for a limited period. Its purpose is to stimulate immediate sales, create urgency, and focus attention on specific products or offers. This specific strategy is being used across many sectors, from retail and e-commerce to travel, hospitality, and subscription services, to meet short-term goals without changing their long-term pricing structure.
While many promotional campaigns involve simple price cuts, the concept is broader. It can include bundled offers that lower the per-unit cost, gifts with purchase, or exclusive access that adds perceived value without heavily reducing the selling price. Examples range from seasonal sales and holiday events to introductory launch offers and “buy one, get one free” deals.
Companies adopt promotional pricing for a variety of reasons. These can include clearing end-of-season stock, boosting sales during slow trading periods, generating attention for a new product, or reacting to competitive market pressures. The effectiveness of the approach depends on matching the right offer to the right audience, timing it well, and ensuring the promotion supports profitability as well as demand.
Promotional pricing can take several forms, each suited to different goals and audiences, such as:
With dynamic pricing software, you take control of promotions, test discount types, and increase profit while staying competitive.
Promotional pricing works because it creates urgency and gives customers a reason to act now. It is not limited to slashing prices; it is about shaping an offer that feels relevant and compelling in the moment. The best promotions have a clear message, are easy to understand, and fit naturally with a brand’s overall positioning.
For example, a back-to-school campaign might highlight affordability and convenience for parents, while a premium brand might focus on limited-time access to an exclusive bundle. In both cases, the goal is to stand out in the market, attract qualified traffic, and encourage conversions without unnecessarily giving away more value than needed to win the sale.
While the reason for running a promotion will vary between industries, the key is to match the offer to the business goal and ensure it is both compelling to customers and financially sustainable.
A blanket discount across all items seems straightforward and easy to set and advertise. But simple doesn’t always mean smart.
Let’s say you offer 20% off on 60 products. Two scenarios might happen:
In both scenarios, you’re either losing money or missing out on traffic. When promotions run on marketplaces or price comparison engines, where price is directly tied to visibility, these inefficiencies add up quickly.
This is how brands unintentionally erode margins. A well-intentioned promotion morphs into a costly exercise, draining profit without delivering the expected bump in sales.
Instead of relying on a one-size-fits-all discount, dynamic promotional pricing uses real-time market data to fine-tune discounts for each product based on its competitive environment. This is where data becomes retail pricing intelligence.
With a tool like PriceShape, for example, you can set a maximum discount limit, such as 20%, but allow the system to apply smaller reductions or no reduction at all for products that do not need the full discount to secure the sale.
This approach makes it possible to advertise an “up to 20% off” campaign while ensuring that each product’s price is calculated for maximum competitiveness and profitability. In practice, your promotion becomes flexible and responsive to the market, rather than fixed and uniform.
Not every promotion needs to rely on heavy discounts. Basket opener strategies use carefully selected products to encourage larger purchases and strengthen your overall campaign results. By focusing on these key items, you can increase order value and attract new customers without sacrificing margin.
Read the basket opener strategy
The difference can be striking when brands switch from flat discounts to dynamic promotional pricing. They often see:
And perhaps the biggest perk? Flexibility. You’re not chained to a static promotion, your prices adapt daily while staying within the limits you set. By combining competitive pricing with product performance analytics, you can see which promotions actually deliver the strongest return.
Promotional pricing can backfire in two main ways:
Dynamic promotional pricing solves both problems if it’s powered by accurate, up-to-date competitor price data. It also removes the manual grind of adjusting prices product by product, day after day.
Promotional pricing can serve a variety of business objectives beyond simply driving short-term sales. Some of the most common include:
A time-limited introductory price can encourage customers to try something new, helping to build initial awareness and reviews. This approach is the opposite of skimming pricing, where a product launches at a higher price and is gradually reduced over time. Linking these two strategies gives marketers a choice depending on whether the goal is rapid adoption or maximising early profit.
Discounting items at the end of a season or ahead of new inventory arrivals helps free up space and avoid holding costs. This is often done to prevent products from becoming deadstock.
Lowering prices during traditionally quiet months can help smooth out revenue and maintain customer engagement.
A short-term offer can help a brand stand out in search results, marketplaces, or price comparison sites, even when competitors have stronger visibility.
Special pricing offered exclusively to existing customers or loyalty program members can increase retention and lifetime value.
While the reason for running a promotion will vary between industries, the key is to match the offer to the business goal and ensure it is both compelling to customers and financially sustainable.
PriceShape’s platform is designed to make promotional pricing both smarter and easier. You can:
You can also track campaign performance as it happens, identifying which products drive the most clicks, where margins hold strongest, and when the offer needs to be tweaked.
Not exactly. Discount pricing is a broad term for reducing prices, while promotional pricing is a short-term tactic tied to a marketing campaign or event.
It depends on your goal. Some promotions work best over a few days to create urgency, while others can run for several weeks if tied to a seasonal period.
No. While it often involves price reductions, it can also include bundle offers, loyalty rewards, or other incentives that add value without cutting prices.
Loss leader pricing: Selling certain products at a loss to attract customers and boost overall sales.
Seasonal pricing: Adjusting prices based on predictable seasonal demand patterns.
Dynamic pricing: Using real-time data to adjust prices for competitiveness and profitability automatically.
Promotional pricing isn’t just a sales tactic; it’s a balancing act between urgency and profitability. The most successful brands treat it as a precision tool, not a blunt instrument. By combining competitive market insights with flexible pricing rules, you can run promotions that actually strengthen your position, rather than erode it.
Want to see it in action? A free trial of PriceShape can show you exactly how dynamic promotional pricing works with your product mix, so you can run campaigns that attract traffic, convert buyers, and protect margins all at once.